Start with the original matching pennies game, where player 1 wins by matchups and player 2 wins by mismatches; and the winning versus losing payoffs are +1 and – 1 respectively. Then decrease the pay

Start with the original matching pennies game, where player 1 wins by matchups and player 2 wins by mismatches; and the winning versus losing payoffs are +1 and – 1 respectively. Then decrease the payoff from a mismatch loss for player 1 (when players 1 and 2 choose tails and heads respectively) from–1 down to – 12, and decrease the losing payoff from a double tails loss for player 2 from –1 down to – 10; but keep all other winning or losing payoffs the same as before (at either +1 or – 1).

Draw the payoff matrix with the modified losing payoffs. Also draw two diagrams showing each player’s pair of expected payoff lines, and showing the other player’s equilibrium decision probability. Finally, calculate the numerical values of these Nash equilibrium probabilities (p1*, p2*) for this case.

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